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Britain’s construction industry is stalling because of uncertainty about the policies of the next prime minister, a leading building suppliers said.
Grafton Group Plc’s Chief Executive Officer Gavin Slark blamed political uncertainty for a dip in construction activity that cut profit for the first six months of the year short of analysts’ expectations. Hot summer weather also cut into the pace of work, and Grafton’s shares fell 5.4% to the lowest since November 2020.
“Headwinds in the UK are the strongest that we’re seeing anywhere,” Gavin Slark said in an interview after the results announcement on Thursday. “People are just waiting to see — what’s going to happen with the new prime minister? Is there going to be something that happens to the economy during the second half? How long do we think this inflationary market is going to be out there?”
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Inflation and the cost of household fuel are putting pressure on UK consumers, which is starting to impact spending on discretionary home improvements, Slark said. The repair and maintenance sector tends to be less discretionary and is more resilient, however, he added.
Official data showed UK construction activity fell 1.4% in June, the sharpest decline since the start of 2021 when a coronavirus lockdown was in place. S&P Global’s index of sentiment in the sector showed the contraction continued into July.
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While a lack of supply is supporting the new market for new building projects in Ireland, the feeling is “a little bit more tentative” in the UK because of rising mortgage rates and inflation, he said.
“There are quite a few elements, but the first base is when we get a new prime minister appointed, who is that new prime minister going to be, and are they going to do something in the short term to ease the pressure on families on the cost of living,” Slark said.
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